05 April 2012

Anyone
relying on the recent words and deeds of Prime Minister Stephen Harper, Natural
Resources Minister Joe Oliver, and other federal officials might be excused for
wrongly assuming that the shipment of Alberta oil sands crude to Canada’s west
coast and thence to Asian markets depends entirely on the approval,
construction and operation of Enbridge’s Northern Gateway Pipelines. With noteworthy consistency, their public advocacy
of Enbridge’s proposed pipeline system avoids reference to another already in
existence.

Kinder
Morgan, one of Enbridge’s chief competitors, owns and operates the 1150 km long
Trans Mountain Pipeline system, which moves crude oil and refined products from
Edmonton, Alberta to the Lower Mainland of British Columbia and, by means of its
branch Puget Sound Pipeline system, to northwestern Washington State. Trans
Mountain has been in operation since the early 1950s. In recent years, 10 per
cent of the tankers visiting Trans Mountain’s Port of Vancouver terminal have
been bound for Asia.

But the
Prime Minister and his federal colleagues portray Enbridge’s Northern Gateway project
as vital not only to diversifying Canada’s crude oil market but also to accommodating
Alberta’s accelerating oil sands production. As they see it, substantially
increasing oil sands production is essential to securing Canada’s long-term
economic growth and prosperity. Enbridge’s project fits into their grand scheme
by adding significantly to the North American pipeline capacity required to
move higher volumes of Alberta bitumen to market, and in particular to Asia. Anyone
crediting their recent words and deeds would be hard pressed to conclude
anything other than that Enbridge’s project is a national imperative.

No such
treatment is accorded Kinder Morgan, despite actively pursuing a proposal to expand
the capacity of its Trans Mountain system. Its current capacity to carry crude oil and other products is 300,000 barrels per day. Kinder Morgan is proposing to
double or more its capacity by twinning the pipeline. The company has already
twinned 315 km of its 1150 km long pipeline, the largest section beginning at Hinton,
Alberta, passing through Jasper National Park, and ending near Rearguard,
British Columbia. By comparison, Enbridge’s proposed system would have two 1177
km pipelines, one carrying 525,000 barrels of oil per day from Bruderheim,
Alberta to Kitimat, British Columbia and the other carrying 193,000 barrels of
condensate per day the opposite direction. Kinder Morgan’s proposed expansion
would roughly match the capacity of Enbridge’s Northern Gateway project to move
(diluted) bitumen from Alberta to the Pacific coast.

The Prime
Minister and his federal colleagues have gone to considerable lengths in their promotion
of Enbridge’s Northern Gateway project, including including Enbridge’s CEO in
the Prime Minister’s delegation on his recent trip to China. But it is in their
taking the fight to Northern Gateway’s opponents that they have gone the
furthest. On 9 January 2012, the day before the federal Joint Review Panel was
set to begin community hearings on Enbridge’s project, Natural Resources
Minister Joe Oliver released an “open letter” with a title befitting a medieval
scholastic treatise: “on Canada’s commitment to diversity our energy markets
and the need to further streamline the regulatory process in order to advance
Canada’s national economic interest.” Although he never referred to the company
by name, the timing his letter’s release sufficed to make clear the federal
government’s position that Enbridge’s Northern Gateway project represents a
not-to-be-wasted opportunity to realize its commitment to diversify Canada’s
energy markets away from the United States, specifically by expanding trade with
“the fast growing Asian economies.”

Getting
around to the threat to his government’s commitment, he wrote:

Unfortunately, there are environmental and other radical
groups that would seek to block this opportunity to diversify our trade. Their
goal is to stop any major project no matter what the cost to Canadian families
in lost jobs and economic growth. No forestry. No mining. No oil. No gas. No
more hydro-electric dams.

As to how
these “radical groups” were planning to block “this opportunity to diversify
our trade,” including first of all stopping Enbridge’s project, the Minister,
expanding on a theme the Prime Minister had broached a few days earlier, said:

These groups threaten to hijack our regulatory system to
achieve their radical ideological agenda. They seek to exploit any loophole
they can find, stacking public hearings with bodies to ensure that delays kill good
projects. They use funding from foreign special interest groups to undermine
Canada’s national economic interest. They attract jet-setting celebrities with
some of the largest personal carbon footprints in the world to lecture
Canadians not to develop our natural resources. Finally, if all other avenues
have failed, they take a quintessential American approach: sue everyone and
anyone to delay the project even further. They do this because they know it can
work. It works because it helps them to achieve their ultimate objective: delay
a project to the point it becomes economically unviable.

The Minister
mentioned only extreme environmental and other radical groups who seek delay, within
the regulatory system and, if need be, through litigation, in order to “kill
good projects.” Using “funding from foreign special interest groups”, these
groups work, he warned, “to undermine Canada’s national economic interests.” Although
he purported to single out for attack only those groups at the extreme, his
underlying logic - connecting delay
to killing good projects and finally
to undermining Canada’s national economic
interests - applied equally to more moderate groups, including First
Nations, who may, without subscribing to a “radical ideological agenda”,
legally and legitimately seek delay, whether within regulatory processes or
through litigation in hopes of killing projects deemed “good” by others yet harmful
to themselves and in violation of their own rights. Given his conviction that
Enbridge’s is one of the “good projects”, the Minister’s underlying logic made
inescapable the conclusion that any First Nations who have determined that the threat
posed to them by Enbridge’s project is unacceptable and who then try to use whatever
delay the system affords in hopes of stopping it are among those working to undermine
Canada’s national economic interests.

***

When otherwise
relatively staid politicians speak and act so, they naturally invite the
question, What is really going on here? Why the partiality to Enbridge’s
project?

Answering
this question requires identifying and sifting through the sorts of reasons
that would motivate such conduct. Rather than answer it directly, I shall work
my way there circuitously. A roundabout approach has in this case the advantage
of rendering the answer more intelligible and credible.

Let me begin
with something obvious. Currently, Kinder Morgan owns and operates the only
pipeline system shipping crude oil from Alberta’s oil sands to British
Columbia’s coast. As one of Kinder Morgan’s key competitors, Enbridge wants (what
it sees as) its share of what it is sure will be an expanding and lucrative business.
This is a basic reason motivating Enbridge’s proposal to build the Northern
Gateway Pipelines.

For their
part, Alberta’s oil sands producers and shippers don’t just want enough
pipeline capacity to deliver to their oil to market, they want excess capacity.
Further, they want this capacity distributed across multiple pipelines,
including even multiple pipelines serving the same market. They want excess and
distributed pipeline capacity – what pipeline companies refer to as
“flexibility” - for the simple reason that they want to their oil to continue
to flow to market despite the inevitable pipeline outages, whether due to
maintenance or spills. The longest delays are associated with oil spills where
resumption of a pipeline’s operation is contingent on a regulator’s green
light. An alternative line with the capacity to take all or at least some of
the other line’s volume can eliminate or at least reduce the seriousness of the
financial effects of the outage.

The media
and politicians have generally fastened on the long-term reason for
constructing excess capacity in the overall oil pipeline system emanating from
Alberta (i.e. to accommodate increasing production) but have overlooked the near-term
reason mentioned above. Overlooking this, they have been unsurprisingly
incurious about the distribution of the excess capacity across multiple lines.

For example,
recent American as well as Canadian media and political discussions of Keystone
XL have only rarely noted that TransCanada already has a pipeline system, its
Base Keystone system, carrying crude oil from Hardisty, Alberta (through
southern Saskatchewan to mid southern Manitoba, then directly south through
eastern North and South Dakota, to Steele City, Nebraska, where it forks east
to Patoka, Illinois and south) to Cushing, Oklahoma. The main portion of
Keystone XL would add the Hardisty-Steele City hypotenuse to the Keystone
system, tracing a diagonal across southwestern Saskatchewan, eastern Montana,
South Dakota and Nebraska. As its finishing piece, the Keystone XL would also add
a pipeline running from Cushing, Oklahoma to the Gulf Coast

Yet more rarely
have they noted that Keystone XL - in particular, the portion connecting
Hardisty to Steele City – would add capacity to the overall system carrying Alberta
crude to the American Midwest far in excess of what is needed and would be
needed for some years to come. In its submission to Canada’s National Energy
Board (N.E.B.) during hearings on the Canadian portion of the Keystone XL Pipeline
in 2009, Enbridge argued that the TransCanada’s Keystone XL project “would
create an unnecessary and unprecedented level of excess pipeline capacity
between western Canada and U.S. markets.” (For the N.E.B.'s reasons for decision, see here.) British Petroleum, Imperial Oil, and
Nexen advanced similar arguments. Although in basic agreement with them, Suncor
– as portrayed by the Board - advanced a more nuanced position:

Suncor supported approval of the proposed Keystone XL
Pipeline project; however, it expressed concerns that the segment from Hardisty
to Steele City is not required within the timeframe proposed by Keystone.
Suncor submitted that the Board should approve the proposed Keystone XL
Pipeline in a timeframe that allows for the Cushing to USGC [U.S. Gulf Coast]
portion to be completed by 2011 and the Hardisty to Steele City portion to be
completed in a manner that does not result in an overcapacity issue for the
whole industry.

Neither
Enbridge nor the other three companies opposed TransCanada’s proposal to build the
pipeline, the first, to carry crude oil directly south from Cushing, the
largest crude trading hub in the U.S., to the Gulf Coast.

TransCanada
spoke frankly to the N.E.B. about its reasons for wanting a second pipeline
linking Hardisty to Steele City:

Keystone submitted that the design of the Keystone system
mitigates the risk of economic loss for each of the Keystone committed shippers,
the uncommitted shippers and Keystone by providing operational flexibility to
deal with pipeline outages. Keystone stated that both committed and uncommitted
Keystone XL shippers could be partially served by the Base Keystone system in
the event of an outage on the portion of Keystone XL upstream of Steele City.
Additionally, Wood River/Patoka shippers could be partially served through the
Keystone XL Pipeline system, through operational tanks at Steele City, in the
event of an outage on the Base Keystone system upstream of Steele City.
Keystone submitted that the current design and the associated flexibility helps
ensure that overall shipping commitments, to the extent possible, are
maintained on both systems in the event of operational upsets.

On the
further issue of whether Keystone XL would promote competition and thus serve
the public interest, the Board summarized a key part of TransCanada’s position
as follows:

Keystone stated that the denial or delay of the Keystone XL
application would also create the opportunity for any competitor, but
particularly Enbridge, to obtain an overwhelming competitive advantage in its
ongoing efforts to serve the USGC market. Keystone argued that the longer the
delay, the more Enbridge’s competitive position would be enhanced.

On 11 March
2010, the N.E.B. gave its approval to the Canadian portion of Keystone XL.
Nearly two years later, on 18 January 2012, President Obama, accepting the
recommendation of the U.S. Department of State, went the other way, denying Keystone
XL the requisite presidential permit. The Department made it clear, however,
that the door remained open to TransCanada to apply again in future. Little
remarked either before or at the time of the President’s decision – and
coincidentally unmentioned by the Prime Minister –, Enbridge had announced several
months prior that it had bought Conoco’s share in the Seaway Pipeline and would,
with its new partner Enterprise, reverse its flow to carry crude oil from
Cushing, Oklahoma to the Gulf Coast. The reversed pipeline is slated to begin
operating by the middle of this year, with an initial capacity of 150,000
barrels per day and rising to 400,000 barrels per day next year. Although
beaten to the punch, TransCanada announced on 27 February 2012 its decision to
proceed with the Cushing to Gulf Coast portion of the Keystone XL Pipeline,
which portion does not require a presidential permit. Yet more recently, Enbridge
announced its plan to twin the Seaway Pipeline, bringing its total Cushing-to-Gulf-Coast
capacity to 850,000 barrels per day by the middle of 2014

To borrow
TransCanada’s language, the construction of three pipelines, with two separate
rights of way, to transport oil from Cushing, Oklahoma to the Gulf Coast will
serve to mitigate the risk of economic loss to shippers. By twinning the Seaway
Pipeline, Enbridge will also mitigate the risk of economic loss to itself.

***

Let me
return, then, to the question, Why are the Prime Minister and his colleagues
partial to Enbridge’s Northern Gateway Pipelines project? Half of the answer is
now clear. Taken together with Kinder Morgan’s Trans Mountain Pipeline system, Enbridge’s
system would provide (at least short-term) excess pipeline capacity distributed
across two pipeline systems capable of carrying bitumen from Alberta’s oil
sands to British Columbia’s coast. Just as this excess and distributed capacity
would mitigate the risk of economic loss due to outages, particularly ones
resulting from oil spills, so too it would mitigate the associated risk of federal
– not to mention Alberta - revenue loss. With billions and potentially more billions
in revenue at stake in Alberta’s oil sands production and related industries,
the federal government places considerable value on the mitigation of this
risk.

But this is
only half of the answer. For the full answer, it is necessary to address a
further question. If mitigating the risk of federal revenue loss is the goal,
why isn’t the Prime Minister satisfied with Kinder Morgan’s proposed expansion?
Twinning the Trans Mountain Pipeline would mitigate not only the risk of
economic loss to the pipeline company and its shippers from outages but also the
associated risk of revenue loss to the federal government. Why, then, isn’t the
Prime Minister satisfied with doubling or even tripling the Trans Mountain Pipeline?

The answer to
this further question is clear. When it comes to risk of revenue loss as a
consequence of a crude oil spill in British Columbia, the Prime Minister is less
concerned with pipelines than he is with tankers. Were one of Kinder Morgan’s proposed
twin pipelines to suffer an “operational upset” due to a crude oil spill, the other
pipeline could still operate. But were a tanker, sailing from the Port of
Vancouver, to spill crude oil off the southern coast of British Columbia, the entire
Trans Mountain Pipeline system could be shut down. Were the tanker spill serious,
resumption of Kinder Morgan’s operations could hinge as much on provincial
politics as on federal regulatory say-so.

The Prime
Minister’s and his federal colleagues’ enthusiasm for Enbridge’s Northern
Gateway Pipelines project has less to do with gaining a second pipeline system
carrying bitumen from Alberta to British Columbia’s coast than it does with
establishing the presence of crude oil tankers in another – and, not
incidentally, a relatively remote – portion of the province’s coastal waters. The
establishment of their presence in the waters of Douglas Channel (and beyond),
taken together with the prior establishment of their presence in Georgia Strait
(and beyond), would significantly mitigate the risk to federal coffers posed by
a crude oil spill off the province’s coast.

From
industry’s side, Kinder Morgan is alive to the risk of economic loss to itself
and its shippers posed by a tanker spill off British Columbia’s southern coast.
The company has raised the possibility of constructing a spur line, connecting
to its Trans Mountain Pipeline near Rearguard, British Columbia and, like
Enbridge’s Northern Gateway, delivering Alberta bitumen to Kitimat for tanker
transport to markets in Asia and elsewhere. This spur line would go far to mitigate
the risk of economic loss resulting from an oil tanker spill to its shippers
and itself.

***

When the
risk of a tanker spilling Alberta crude off B.C.’s coast, the potential (especially
provincial) political fallout, and the associated risk of federal revenue loss
are considered, the Prime Minister’s partiality for Enbridge’s project becomes
understandable. But the sought-for mitigation of risk to federal revenue loss
cannot be gained without the introduction of the correlative risks of environmental
and, consequently, socio-economic harm into regions of British Columbia
previously free of such risk. Accordingly, the Prime Minister’s, as well as his
federal colleagues’, partiality for Enbridge’s project merits discussion not
only on strict legal and economic grounds but also on broader ethical or moral
grounds.

Added to
Kinder Morgan’s Trans Mountain Pipeline system, Enbridge’s Northern Gateway
Pipelines would roughly double the oil pipeline footprint in British Columbia
and thus the geographic area subject to risk of environmental harm. Bisecting
the province, Enbridge’s Northern Gateway Pipelines would introduce the risk of
socio-economic harm into dozens of communities hitherto free of the risk
associated with oil pipelines and tankers. Many of these communities are
indigenous and reliant on their lands and waters for their social and economic
well-being. For many of these, Enbridge’s proposal represents a serious threat;
for some, even an existential one. The Gitga’at community at Hartley Bay, for
example, has not-without-struggle maintained their ancestral connections to and
thus dependence on their lands and, especially, their waters. Their dependence
makes them particularly vulnerable to the adverse effects of crude oil spills
within their core territory. Anchored in their territory through their village
at the end of Douglas Channel – close by which every one of Enbridge’s
requisite tankers must pass – a more than minor disruption to their fishing and
seafood harvesting resulting from a crude oil spill in their waters would
entail serious social, cultural, health related and economic harm to the community. A sufficiently lengthy
disruption, such as would result from a major spill, would add irreversibility to
the harm.

Granted that
the Prime Minister’s partiality for Enbridge’s Northern Gateway project is driven
by a concern to mitigate the risk of federal revenue loss stemming from an oil
tanker spill off the coast of British Columbia, an inquiry into the ethics or
morality of his partiality should centre around the question of whether the mitigation
of the risk to federal coffers – not to mention the risk of economic loss to
oil sands and related industry - should be sought at the cost of introducing
the risk of environmental and thus socio-economic harm to dozens of indigenous
and other communities located along the path of Enbridge’s proposed pipelines
and tankers. Ranging from minor to significant to catastrophic, the totality of
the certain (for example, here), likely, and potential harm to these communities that Enbridge
would visit upon them should, upon reflection, one might think, suffice to jettison
the idea that the addition of Enbridge’s pipeline qualifies as an ethical or
moral means for mitigating the risk of federal revenue loss.

***

This year’s federal
Budget, Economic Action Plan 2012, confirms that the Prime Minister’s and his
federal colleagues’ enthusiasm for Enbridge’s Northern Gateway Pipelines
project has more to do with establishing the presence of crude oil tankers in
another portion of the province’s coastal waters than it does with increasing
and distributing pipeline capacity. Tabled in the House of Commons on 29 March 2012 by the Minister of Finance, the Budget
expresses, among other things, the federal government’s commitment to introduce
legislation to streamline the review process for major economic projects.

Directly under the subheading Supporting Responsible Energy Development,
the Budget proposes to spend $35.7 million over two years “to support
responsible energy development. But the subsection that follows does not deal
in such generalities. It deals almost exclusively with tanker safety. Focusing
solely on the British Columbia, it begins:

Safe navigation of oil tankers is very important to our
Government. Oil tankers have been moving safely and regularly along Canada’s
West Coast since the 1930s. For example, 82 oil tankers arrived at Port Metro
Vancouver in 2011. Nearly 200 oil or chemical tankers visited the Ports of Prince Rupert and Kitimat over the
past five years. They all did so safely.

After some further description of what
the federal government is already doing to ensure tanker safety, the Budget goes
on to propose “as further measures to support responsible energy development”:

•
New regulations which will enhance the existing tanker inspection regime by
strengthening vessel inspection requirements.•
Appropriate legislative and regulatory frameworks related to oil spills, and
emergency preparedness and response.•
A review of handling processes for oil products by an independent international
panel of tanker safety experts.•
Improved navigational products, such as updated charts for shipping routes.•
Research to improve our scientific knowledge and understanding of marine pollution
risks, and to manage the impacts on marine resources, habitats and users in the
event of a marine pollution incident.

All but the second of the foregoing
measures are explicitly tied to tankers. The second seems intended to cover
pipelines as well as tankers. Despite mentioning only one measure possibly
intended to cover pipelines, the Budget concludes the subsection saying: “These
measures will ensure that pipelines
in Canada are carefully monitored, environmental consequences are understood
and emergency response is improved” (emphasis added).

A brief subsection immediately follows
that proposes to provide the N.E.B with
$13.5 million (fully cost recovered from industry) over two years to increase
the number of inspections of oil and gas pipelines and double the number of
annual comprehensive audits.

The
federal government’s commitment to spend over two and one half times more on
tanker than on pipeline safety, not to mention the greater attention its Budget
devotes to tanker safety, is further evidence that in the Prime Minister’s and
his federal colleagues’ estimation, oil tanker spills off the coast of British
Columbia are of far greater concern than oil pipeline spills. Why they are
should now be clear.

Links

First Nations Sacred Sites in Canada's Courts

UBC Press, 2005

"I know of no other book that even attempts to do what Michael Ross's very careful and intelligent legal analysis accomplishes here. Ross's arguments are logically presented and clear, and he makes an important contribution to the literature."

– Peter Russell, Professor Emeritus in Political Science, University of Toronto

*First Nations Sacred Sites in Canada's Courts was shortlisted for the Third Annual George Ryga Award for Social Awareness in Literature (2005).

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About the Book

The sacred sites of indigenous peoples are under increasing threat worldwide as a result of state appropriation of control over ancestral territories, coupled with insatiable demands on lands, waters, and natural resources. Yet because they spiritually anchor indigenous peoples’ relationship with the land, they are crucial to these peoples’ existence, survival, and well-being. Thus, threats to sacred sites are effectively threats to indigenous peoples themselves.

In recent decades, First Nations peoples of Canada, like other indigenous peoples, have faced hard choices. Sometimes, they have chosen to grieve in private over the desecration and even destruction of their sacred sites. At other times, they have mounted public protests, ranging from public information campaigns to on-the-ground resistance. Of late, they have also taken their fight to the courts.

First Nations Sacred Sites in Canada’s Courts is the first work to examine how the courts have responded. Informed by elements of a general theory of sacred sites and supported by a thorough analysis of nearly a dozen cases, the book demonstrates not merely that the courts have failed to treat First Nations sacred sites fairly but also why they have failed to do so. The book does not end on a wholly critical note, however, but suggests practical ways in which courts can improve their handling of the issues. Finally, it shows that Canada too has something profound at stake in the struggle of First Nations peoples for their sacred sites.